Playbooks Win the Game-and the BusinessBy Diana Mirakaj | Posted 2012-07-02 Email Print
Each enterprise should have a unique playbook that reflects its management capabilities, business architecture, operational practices and cultural norms.
By Diana L. Mirakaj
Whether you’re talking about college or professional football, you can be certain plenty of time will be spent before the game creating plays based on past games, player stats, predicted outcomes and hopeful scenarios. Opposing coaching staffs are hard at work developing their respective playbooks for the game.
One could argue there’s only so much preparation that can go into determining which team will win, but would anyone actually win that argument? Probably not—and definitely not in business. In business, being prepared is everything. In some cases, even that’s not enough.
Everyone talks about the need for agility. At BTM, building an agile enterprise is a journey that includes the creation of a “management playbook” to coordinate countless activities, functions, models and operations.
Each enterprise’s playbook is unique, reflecting its management capabilities, business architecture, operational practices and cultural norms. However, there are underlying foundational principles that, together, construct templates that can accelerate playbook development, communication and execution.
Bringing a management playbook to life requires a number of key steps, each of which is supported by activities specific to an organization’s capabilities, current state and agility objectives. To create an effective playbook, an organization must:
· Validate and communicate its business-technology strategy to all stakeholders.
· Establish a mechanism for rapid, continuous business model development.
· Manage its investments from both strategic and tactical perspectives.
· Identify and mitigate risk.
· Optimize and manage partner relationships.
The management playbook should also contain other elements, including the organization model, a description of agile business architectures and processes, key operational and performance information and measures, and automation tools and requirements. The playbook must be communicated to the key executives and managers responsible for its execution.
Most importantly, progress must be tracked, investments made, risks managed and lessons learned. Business agility is not simple or straightforward, but it’s a worthwhile endeavor.
Research conducted in the BTM Business Agility Index (www.btminstitute.org) demonstrates that agile companies have a dominant short-term performance advantage of 20 percent and a long-term advantage of 12 percent. They also have lower stock price volatility (23 percent short term and 29 percent long term) than their industry peers.
Looking beyond the averages, individual measures of performance reinforced the agility dominance: Leader firms outperformed their peers in every measure. From a short-term perspective, the range was from 0.2 percent (revenue growth) to 37.6 percent (Economic Value Added [EVA] /capital). Long-term, the range was from 1.1 percent (revenue growth) to 29 percent (volatility reduction).
This research revealed the key role business agility plays in economic performance. Achieving agility is not exclusive to organizations of a certain size, revenue or industry sector, but is available to all companies. Further, this research specifies the behaviors and constructs that drive agility: repeatable management practices that can be implemented by utilizing a set of specific organizational capabilities across four functional areas.
An organization that has the ability to successfully negotiate its path through the ever-shifting competitive landscape has developed the talent to continuously transform itself as opportunities and threats appear. This organization maintains three characteristics:
1. Ongoing assessment of activities, eliminating those that don’t serve the core business strategy
2. Continual refinement of activities for greater efficiency and productivity
3. Redirection of resources to new products, processes and business models.
Building an agile organization is not easy. Change must become a part of an enterprise’s fabric. Bringing in a persuasive leader might help the transformation, but it is the change management skills they bring to the table that will help make the journey a successful one.
More crucial to that success, however, is the need to incorporate new ways of doing business into the company’s management systems and business processes. This requires new organizational structures, the creation and sharing of new types of information, and establishment of new decision-making processes.
Investing in business technology should begin with an organization’s strategic position. However, these positions are often crafted without a clear understanding of the current state of an organization’s business technology, as well as its potential to influence other decisions that need to be made.
Since business technology is so critical in establishing or sustaining a strategic position in its successful execution, not understanding its roles across a firm’s product markets can lead to inappropriate levels of investment—which, in turn, can result in failure. To avoid that outcome, the following steps can help ensure that your business strategy matches the requisite investments:
Step 1: Review your firm’s strategic position, as well as your business strategy and technology strategy. Are marketplace and competitive analyses part of these activities? Is the role of business technology prominent in these analyses? Is strategic experimentation used to better understand the roles served by business-technology investment in acquiring and sustaining favorable market positions?
Step 2: Determine how business-technology investments are handled in your firm’s strategic planning and budgeting activities. To what extent do investment levels across operating units reflect the role that business technology serves in enabling strategic positions? To what extent do investment levels across staff or support units reflect the role that business technology serves in helping these units accomplish their mission? Are the baselines for such analyses founded on historical grounds, industry benchmarks or carefully selected (strategically and operationally comparable) peer groups?
Step 3: Assess the existence and maturity of capabilities across the enterprise. Which capabilities need to be maintained at world-class levels? Has sufficient investment in capabilities occurred at an enterprise level and within each business unit?
Step 4: Answer these questions: Is your business strategy and strategic position communicated and understood across the organization? Are your organization’s business strategies reflective of exploitative strategic actions, exploratory strategic actions or both? What roles do your business technology investments play in enabling these strategic actions?
Step 5: Develop, after these questions are understood, an appropriate mix of the various kinds of business technology needed to advance your firm’s strategic agenda. Technology thus becomes a significant tool for the CEO and the board from a business standpoint, as opposed to a line item in next year’s budget.
Diana L. Mirakaj is the chief marketing officer at BTM Corporation, a management solutions provider based in Stamford, Conn., and a co-author on The Power of Convergence. Her experience gives her a singular perspective on the connection between business strategy and the value of technology. © 2012 BTM Corporation